General Economic Conditions Continue to Deteriorate

[greg334]

"This recession can be a gold mine for an intelligent driver."

Yes Blizzard, this is true. But we can't lump an 'independent' driver with a 'company' driver who has no choices in how or where they can find work.

But I also think that after reading Ford's reasoning over not building an engine plant in the US for the EU/world car they are going to build, I am thinking that the big clowns are not going to 'recover' enough to make a difference for us, there will be more cross over in this niche market.

[LDB]

And if we do deteriorate further so that we are in a recession everything said will be even more important.

recession: noun, An extended decline in general business activity, typically two consecutive quarters of falling real gross national product.

[layoutshooter]

Gee when I was in High School it took 3 consecutive down quarters to be a recession. But, we have not had 2 yet. Only one then an up quarter. We shall see. I know one thing, the doom and gloom jockies will be really upset if we don't have one. If the Osama Obama bunch gets in there will be a "sudden" improvement in numbers. They will then print the fact that we are not yet in a recession. And it will all be the doing of thier election. If McCain gets in it will be AT LEAST 4 more years of the press whinning. Not matter what happens. And by the way I look at the current crop of candidates like diseases. Obama/Biden are terminal brain cancer and McCain/Palin are drug resistant tuburculocous. One may be better than the other but I would really have neither. Layoutshooter

[ATeam]

recession: noun, An extended decline in general business activity, typically two consecutive quarters of falling real gross national product.

Unless Mr. Feldstein has information never made public we have not had two consecutive quarters of decline and are not in a recession. Further, with as absolute and as simple a definition as that, it is foolish of him to suggest a recession would not be identified until much later. GNP numbers are usually available within days of the end of the quarter. There would be no need to wait any longer than 4/15, 7/15, 10/15 or 1/15 to know and announce a recession and you can be positive the party out of power would not wait to announce it.

Talking about the difference between the NBER's definition of recession, the dictionary's -- and the respect that should or should not be given to each -- is like talking about the weather and debating about a day being partly cloudy or partly sunny.

As a practical matter, it does not matter what definition we use. It matters how business is for us on the ground.

People who use the "two consecutive quarters" definition certainly have a defensible basis for doing so. I only ask readers to understand that I favor and use the NBER definition. Interested readers can learn more about how recessions are officially dated at the NBER web site.

I also hope readers note how I try to avoid discussions about the politics of the economy. When I view the economy, I assign very little weight to government actions. That is because I believe economic forces are more powerful than the President, Congress, the Federal Reserve Bank, and all of them combined.

The federal government can take certain actions that have certain effects, and will often do so for political reasons. But that affects the larger forces no more than putting up a dike affects the water.

You might be able to change the water's path for a time, but not without causing other things to happen across the bank, upstream or downstream. And even with your best efforts and intentions, the dike may still give way.

For example, not long ago, the Federal Reserve Bank stepped in to keep Bear Stearns from collapsing and thereby prevent a market meltdown. A dike was built, and indeed, a market meltdown was averted. But the water continued to flow.

In July, the U.S. Treasury Department, in an effort to calm market nerves, promised to stand behind Freddie Mac and Fannie Mae. A dike was built, but the water continued to flow.

This weekend, political people decided another dike needed to be built to sieze Freddie Mac and Fannie Mae to avert a market meltdown. But the water continues to flow, as it always does.

As expediters, we will not succeed by rooting for or against one dike or another because we support or oppose the political people who can build or remove a dike. We will succeed by thinking clearly about the water, and making wise decisions relative to its flow.

[layoutshooter]

We agree on one thing Phil, Just let the water run free, remove all the ****s and dikes and let 'er rip!!! At least that is what I thought you meant. Layoutshooter

[blizzard]

More Keynesian economics at work here. Monetary and fiscal policy to the rescue to prevent a depression!!!

[Rabbit]

Here's what I think everyone's missing, RE the bailouts for the rich. We've so top-loaded the income tax system, with the well-off paying the majority of income taxes, that the Federal government _can no longer afford_ to let the rich lose money. If they do, the government will go broke. If you want to see Federal policies that help the poor, fix things so that the _poor_ are the ones who pay for government.

I'm not being sarcastic here. For much if not most of US history, this was exactly how things worked. Little guys paid the taxes, mostly indirectly through tariffs. The key was that government was so _small_ that the poor could _afford_ to pay for it. When we decided we wanted the government to do things like have a Social Security system, subsidize the building of large dams and artificially support farm prices, suddenly more dollars were needed. And so the phrase "soak the rich!" was invented. My point is that now were so far down the "soak the rich" road that _their year-to-year financial well-being has become essential to the nation's survival_. The intent was to help the little guy, sure. But now, the rich man _has_ to come first, or the magic money river dries up and _no one_ has anything.

We have met the enemy, in other words. And they is us! If the poor pay the bulk of the taxes, then the wealthier the poor are, the more Washington has to spend. If the _rich_ support the government, however, then _they_ are the ones that the lawmakers _must_ make richer. I don't know about you guys, but looking at things this way has explained _many_ things to me.

[greg334]

What? With all this doom and gloom you have been presenting for the last year, you finally came around to what I have been saying "As a practical matter, it does not matter what definition we use. It matters how business is for us on the ground."

Market meltdowns?

No way this would have actually happened, the fact is that Bear Streans people felt that they needed some intervention so the foreign investors didn't falter. There would be no "melt down".

The same d*mn thing happened with Freddie and Fannie, the foreign investors were taking a beating with the downturn in their mortgage investment portfolio because freddie and fannie sole the crap out of them overseas with the low interest rates and high dollar value of the loans, when the loans were bust, the investment quality of Freddie and Fannie went with them. And this is why the real action out of the fed. Germany for one invested heavely into our mortgages and they have been crying about the loses they incured so mush so that the Deusches bank had real problems, the same goes for the French and other countries and this spured the idea that that we have a real crisis. We don't when you look at what is really going on, the market is inflated to the point that we need a serious adjustment in the housing market as we needed in the tech area.

This bail out up front will cost 200 billion but the real problem is as follows;

The assets are being listed at $5.7 trillion and not being adjusted for any loses or adjustments due to MARKET coming down to realistic levels. Which means that we, the tax payers are guaranteeing ALL THE LOANS at $5.7 trillion. The true assets are being estimated somewhere around $2.5 to $3 trillion dollars.

There is no cleaning of the house with the managment who is at fualt for this, there should be some serious jail time for these people.

THe OMB and the CBO both can not put a dollar amount on this package which is because there is too many unanswered questions involved. The congress is pushing this, and the people think that they are being helped, which we the people will get screwed again.

AND the last thing is in comparison to other bail outs, this is the worst. The S&L scandal and Enron are two which are nothing in comparison.

AND Phil, the problem is this is no longer a free market, the feds have more control over this than most can understand. They can make or break the market now, which essentally they have with their three times bail out of things that should have just run its' course and adjust itself. There is a lot to be said why, but to honestly try to pull politics out of this is like pulling water out of rain.

[iceroadtrucker]

NO Worries

My house is paid for with my Retainer Check from the GOVT.

Notice I said Retainer.



Unlike Bill I Served and waiting for the Recall BTW Where is Bill any one Seen Bill What Happend to Bill????


Fanniey May and U know who!! Freddie

Intersting isnt it. ALL those ARMS people got houses at low rates.

Laughed they did at us that got the 6.0 and 5.0 locked
Ya they got a 3 or a 2 but now what WAMO
Shot up like a sky Rocket and see the situation they are in now.

Loosing there Hats.

Not good on the Front line.

Breads looking like Crumbs better gets some Obamma Butter to help make it stick together. I dont think Mcain sugar will do anything but rot the teeth and the gut.

Now hows that.

[nightcreacher]

Just remember,money is the easiest commodity to replace.

[arkjarhead]

My macroeconomics professor, Dr.Grabber, may not know what he is talking about but he claims we are not in a recession. Of ocurse he is not a liberal either. I mean the guy only has a Phd in Economics so he may not know that much about it.

[iceroadtrucker]

Just remember,money is the easiest commodity to replace.

Ya monie is the easy thing. I here ya steve.

Truth. But then again some try to keep up with the Jones

and others are just satisified till some one rocks the boat so to speak.

Ya know I seen a post card that had a picture of a Donkey in Sun glasses in Mississippi when I was in Olive Branch

Reminded me of someone.

[ATeam]

My macroeconomics professor, Dr.Grabber, may not know what he is talking about but he claims we are not in a recession. Of ocurse he is not a liberal either. I mean the guy only has a Phd in Economics so he may not know that much about it.

Among PhD economists in academia, Wall Street experts, financial journalists and economists employed by large corporations and trade associations, some say we are in a recession and some say we are not.

I agree with those who say we are in a recession. Who is right and who is wrong will become known when the National Bureau of Economic Research Business Cycle Dating Committee dates the recession as described above.

One of the people who says we are in a recession is Martin Feldstein. Him having served as President Regan's chief economic advisor, it would be a stretch to characterize him as a liberal, simply because he believes we are now in a recession.

Viewing the economy through political filters clouds one's view of the economy. It's not about what the liberals or conservatives are doing. It's about what the economy is doing.

When listening to people talk about the economy, it is helpful to ask, "What is he or she trying to be right about?" While it is not uncommon to hear people eager to score political points by assigning credit or blame for economic results, such people are not talking about the economy. They are talking about politics. It takes some effort separate the wheat from the chaff when listening to economic opinions.

My approach is to disregard the politics and focus on the big-picture numbers (and not an over-simplified indicator like GDP alone). Yes, politics influences the economy, but in the long run, the economy is more powerful than any political force, I believe.

[arkjarhead]

I don't remember Regan being President, but what I have heard about Reganomics I wouldn't trust his top economic advisor any farther than I can throw a Peterbilt.

[greg334]

"My approach is to disregard the politics and focus on the big-picture numbers (and not an over-simplified indicator like GDP alone). Yes, politics influences the economy, but in the long run, the economy is more powerful than any political force, I believe."

Well Phil, the problem with your approach is it is flawed. You complicated the matter by bringing up the subject in a way to force an examination of the larger picture and put emphasis on how it effects the overall climate for everyone.

Not saying that there is a cause and effect here but as I said, the bigger picture does not matter to the average person who is trying to work, feed their kids and pay off the house. They know that politics has a direct bearing on their lives through the economy and that politics can ruin it or make it prosper.

IN fact Phil, politics casts a huge shadow over the economic condition of the country and even the world. Just tax code changes can bring people, industries and even the country to a stop. At the point of the FDR's third term, the economy ceased to be able to function without the political intervention from the federal government.